PSC backs bigger investment in energy efficiency

Wisconsin’s energy efficiency programs would receive increased funding from electricity ratepayers in the next four years under a proposal adopted Thursday by the state Public Service Commission.

The state's Focus on Energy program has been reallocating its budget to meet the heavy demand for energy-efficiency services from the business community, according to the PSC.

The commission’s action must be endorsed by the Legislature’s Joint Finance Committee.

A study by the Energy Center of Wisconsin, released last year, concluded Wisconsin could triple funding for energy efficiency and achieve $1 billion in savings on energy bills for customers.

Citing the economy, the commission voted to increase funding for efficiency initiatives, but didn’t increase spending as much as advocates had sought.

PSC Chairman Eric Callisto urged the agency to adopt a more gradual ramp-up in funding for energy efficiency given the state of the economy.

“Rates will go up over time if we don’t invest in energy efficiency,” he said. “I’m also cognizant of the economic woes the state is now facing.”

The PSC decision would set a target of reducing the state’s electricity demand by 1.5% beginning in 2014.

Under the proposal, funding for energy-efficiency programs would expand to $120 million in 2011 from $100 million this year, with the goal of expanding incentives aimed at reducing energy bills.

Funding would then increase to $160 million in 2012, $204 million in 2013, and $256 million in 2014, under the PSC proposal.

Under state law, the commission is allowed to seek increased funding for energy-efficiency initiatives based on a study conducted by the state energy think tank Energy Center of Wisconsin in Madison.

That study, released last year, concluded Wisconsin could triple its funding for energy-efficiency programs - to $350 million a year - and businesses would still see savings totaling $1 billion a year.

But the state’s investor-owned utilities had objected to boosting energy efficiency spending to those levels, citing concerns that customers would react negatively to energy efficiency-related increases.

"Many of our customers perceive a connection between conservation programs and high rates, and high rates are the leading cause of dissatisfaction with utilities," the Wisconsin Utilities Association said in a filing with the PSC.

The PSC proposal wouldn’t result in rate increases for the state’s largest businesses, whose payments for energy efficiency are barred from rising under state law.

Charlie Higley, executive director of the Wisconsin Citizens’ Utility Board, a group that represents small business and residential customers, said the payoff is clear from investing in energy efficiency.

“There’s still far more energy efficiency available than what they will be able to accomplish with that funding,” he said.

The commission ended up picking smaller funding levels than were sought by a variety of stakeholders that weighed in with recommendations – including the Wisconsin Energy Conservation Corp., operator of the Focus on Energy program; the Customers First coalition; and a coalition of consumer, environmental and renewable energy advocates.